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Whitepaper Survey
What is Your
Recession Sales Strategy?
by Josh Gordon
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The CUSTOMER COLLECTIVE | Recession sales strategy
Introduction
What is Your Recession Sales Strategy?
Does your organization see the recession as a sales problem or a strategic
business opportunity?
Most organizations see it is as the former,
missing significant opportunity to grow their
business. A lot of companies are responding
to the recession as if it was just a slow sales
time. But there are fundamental differences
between a time of slower sales and a recession. By understanding these differences and
making adjustments, organizations can maintain business during a recession and, when
it is over, emerge with more growth potential,
loyal customers, stronger earnings, and a
more unified organization.
Table of Contents
Introduction................ 2
Finding #1.................. 2
Finding #2.................. 4
Finding #3.................. 5
Finding #4.................. 6
Finding #5.................. 7
Finding #6.................. 9
Conclusion................. 10
This study was intended to measure the
effects of the recession on sales organizations.
I conducted interviews with some of the nations’
top sales consultants, and included some of my
own experience as well, to add perspective to the
survey results. But in the process came a surprising discovery: much of the “experts’” advice
was at odds with the responses from the sales
organizations. Could the mainstream response
to the challenge of selling through a recession
be generally off target? This study found that it is.
One theme that all of our experts agreed on is that
the most effective sales practices in a recession
are actually counterintuitive to many of the usual
recommended strategies.
The good news is that there is room for quick
improvement. If you have not rethought your
sales mission for the recession, use the
following six findings and recommendations
to start the process.
Finding #1
As a result of the recession, the top direction
sales organizations are being given is to go
after new categories of customers.
As a result of the recession, my sales
organization has…
It can make sense: If business in your market
is down, why not go after business in other categories or markets? But Dave Stein, CEO of ES
Research Group, generally advises against this:
“Instead of charging off after new categories of
business in a recession, we advise organizations
to focus on their core customers, while providing
them with additional products and services.
There are a couple of reasons for that.
“First, during a recession many clients will ask,
‘Is the economic situation hitting our suppliers as
badly as it’s hitting us?’ They are looking at risk
right now, and are very concerned about doing
business with suppliers who may not be viable;
this is especially true of smaller suppliers. So,
clients will tend to do business with companies
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The CUSTOMER COLLECTIVE | Recession sales strategy
FINDING #1
that they have done business with before, where
they feel a degree of security.
“Security issues aside, there is the practical matter
of an organization’s ‘cost of sales.’ The calculations for bringing aboard a new customer versus
selling to an existing one have been around for
ages. It simply costs much less to sell to an existing customer. These basics do not disappear in
a recession. Why pick an uphill battle at a time
when sales are challenging and clients are pulling
back? Why not use these same forces to your advantage? The key is having more products to sell
to your existing client base. Besides developing
new products, you can reconfigure others and pull
back older ones that still have useful life in them.”
To take advantage of Dave’s strategy, you cannot
treat the recession solely as a sales problem. To
come up with more products requires that your marketing and product development people be involved.
“The calculations for
bringing aboard a new
customer versus selling
to an existing one have
been around for ages. It
simply costs much less
to sell to an existing
customer.”
But think about how this strategy can benefit your
organization. It will take less effort to sell, so sales
could improve. When the recession ends, you will
have a more loyal group of customers who are
more dependent on you for products than ever
before, and you will have added more new products to your portfolio.
While prospecting for new business in the recession, I advise my sales force clients to consider
how businesses have behaved during previous
downturns. Studies of past and present recessions have noted consistent repeating patterns.
Follow these to anticipate which companies will
provide the best prospects for selling. Specifically:
Consider that recessions do not impact every
company to the same degree. Some product
categories and industry segments are recessionproof. Take the time to consider which might be
recession-proof in your markets. When I work with
salespeople in recession sales training sessions,
they often laugh at this question at first. But if
think your client list through, you may find surprises. Some industries that traditionally glide though
recessions are chocolate manufacturers, motion
picture entertainment, healthcare, and bankruptcy
lawyers. To think this through this for your account
list, consider who is selling the lower cost products, and who has products that naturally save
money or do things less expensively.
To get my clients thinking, I refer them to a list
maintained by Career Hub, of 72 jobs that have
proven to be recession-proof during the recessions of 1990, 2001, and 2007.
While selling during the last recession, I noticed
that I was making more sales more quickly to
small and mid-sized accounts than to those in the
Fortune 500. My smaller accounts bounced back
faster because they could change and get past
the “cut back” phase more quickly. Once the adjustments were made, they returned to business
growth, and to buying.
My experience was not unique. Similar results
were found after the 1991 recession by Avraham
Shama, and published in the Journal of Small
Business Management. Shama measured the
effect of that recession on small Inc. 500 businesses versus large manufacturing and service
corporations, and came to the same conclusion
that I did.
Typically, you direct a sales staff to go after the
biggest organizations possible, as they represent
the largest potential for sales. But in a recession,
it might just be that your mid-sized and smaller
clients are actually better prospects, due to their
ability to bounce back more quickly.
U
se the Career Hub list of 72 recession proof jobs
from 1990, 2001, and 2007 on sales calls
U
se the Sharma study on large vs. small companies
in a recession on sales calls
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FINDING #2
Finding #2
As a result of the recession, 26% of sales
organizations are working more closely with
their marketing departments.
The good news is that about one in four sales
organizations are working closely together with
their marketing departments to fight for more
sales during the recession. The bad news is that
this leaves out the other three out of four that are
not. As we saw in Finding #1 of this study, having
marketing and sales work together is essential to
the success of the sales staff.
often what blocks a sale is not an objection over
product features but simply availability of capital:
“In some cases you need to sell into markets
where demand is frozen because your client’s
access to capital is frozen as well. This is different
from selling in a market where demand is simply
slack. Smart vendors need to function more like
banks to get demand flowing again.
“For example, in the software industry, we’ve
seen a great shift moving from conventional,
on-premise software to on-demand software.
The difference financially is that organizations no
longer have to pay out large sums of money for
a license. They pay as they go on a monthly or
quarterly basis. This idea needs to be applied
more broadly to the economy as a whole.
“I noticed K-Mart is now advertising a lay-away
plan. That old idea that was clobbered long ago
by credit cards. But as credit card rates go higher,
people are reluctant to use them and we are now
seeing a renaissance for lay-away.”
“Marketing departments
need to do far more
than just cooperate
with sales, they need
to become advocates
for sales and shift their
basic function in the
process.”
According to Jill Konrath, Chief Sales Officer for Selling To Big Companies, during a recession, marketing
departments need to do far more than just cooperate with sales, they need to become advocates for
sales and shift their basic function in the process:
“Instead of doing branding-type activities, marketing departments really should be focused on lead
generation and the need to establish a thought
leadership position on the internet. They need to
be out there catching ‘seekers,’ people who are
actively looking to solve the problems that the
company’s products address. Marketing should
be capturing those names and entering those
people into a lead nurturing program where they
are consistently sent more information. “Finally,
marketing needs to develop information on how
to solve those problems and put it into the hands
of their sales department.”
Denis Pombriant, Founder and Managing Principal
of Beagle Research, advises that in a recession,
At companies where marketing is not helping the
sales staff, Dave Stein advises sales executives
to take matters into their own hands: “If there’s
no other way, take your marketing VP colleagues
out for the best meal in town and beg them to
help redefine their own company’s value proposition to their customers. Ask them to provide the
sales staff with business cost justification, online
models, case studies, endorsements, and specific
examples. Salespeople need to be able to walk into
a customer’s company feeling like they completely
understand what questions to ask. Then, once they
get the answers, they need to know how to determine the value in dollars they can deliver to their
customer as the result of a sale. Because if they
don’t do that, the customer is not going to
buy anything. That’s what’s going on out there.”
Any company whose marketing department is
not actively supporting their sales staff during a
recession is putting their organization at a huge
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FINDING #3
financial risk. A study by the consulting firm Bain &
Company, released in March 2008, found that recessions provide a strategic window through which
competitors can surpass or fall behind one another
at speeds double those of normal times. The study
documented that financial performance follows “…
more than a fifth of companies in the bottom (financial) quartile in their industries jumped to the top
quartile during the last recession. Meanwhile, more
than a fifth of all “leadership companies”—those
in the top quartile of financial performance in their
industry—“fell to the bottom quartile.” Recessions,
while hard on companies, also provide a window
of opportunity to move ahead of competition. Only
marketing departments that work with their sales
staffs can take advantage of this huge opportunity.
Use the Bain & Company study on sales calls
Finding #3
The two most frequently used strategies for
keeping customers loyal during a recession
are to seek more customer contact and improve customer service.
“In a recession, it is
not the volume of
contact you have
with a customer that
makes the difference.
It is having the right
approach, products,
and solutions.”
In the study, I asked an open-ended question to
determine what strategies sales organizations are
using to keep existing customers loyal. Of the 321
respondents to the survey, 244 gave a verbatim
response. A hand tabulation of their comments
revealed the following:
“What have you done to assure the loyalty of
existing customers who might be targeted by
lower cost or desperate competitors?”
56 more frequent customer contact
51 improving customer service
21 keeping prices low/reduce costs
19 “nothing”
12 reinforce value proposition
Jill Konrath believes that the “more frequent
customer contact” strategy can backfire: “Many
customers have had layoffs and they are working
harder. They have less time and more responsibility. The last thing they want is a salesperson looking to spend more time with them.
“However, if that same customer can look at you
as a resource to help them do their job better,
leading to their company making it through this
crisis, then the time with you will be viewed as
time well spent. If you don’t know why your customers should see you from this perspective, then
you’ve got some more work to do. Don’t try to
speed things up by seeing them prematurely, because it will just spoil your chances for next time.”
In a recession, it is not the volume of contact you
have with a customer that makes the difference. It is
having the right approach, products, and solutions.
Denis Pombriant has doubts that customer service is the critical factor when keeping customers
loyal in a recession. He says, “When you look at
loyalty there are two attributes that you need to
consider: attitude and behavior. Attitude is, ‘I like
this company, they’re good to do business with
or they’re not.’ Behavior is, ‘I’m going to continue
buying from them.’ In an economic downturn it is
the behavior that goes south first.
“What organizations need to understand is how
their client’s behavior is modifying, and figure out
whether or not they can do anything about it. In
some cases you can’t such as with the customers
whose behavior goes south because they are just
not using the product or service fast enough.
“But for the client whose behavior you can
change, the issue becomes understanding how
they can affect or adjust their practices to stoke
behavior. That might be as simple as offering
more attractive credit terms, more attractive
payment terms (say, net 60 instead of net 30
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FINDING #4
days), or being able to purchase products over a
period of time. This keeps the cash flowing, albeit
more slowly, but enables the customer to resume
the buying behavior.”
Dave Stein agrees that customer service is not
the critical factor in keeping business: “If what you
are proposing to your customer is not generating business, offsetting attrition, or saving money,
then there’s really no value to it. Getting high
scores on a customer survey right now? So what!
I’m not saying improving customer service is a
bad thing, but it’s about prioritization, what are
you going to spend your time doing? I want to
spend my time helping my customers succeed,
win more business, lose less business, sell at
higher margins. That’s what I’m focused on.”
To take advantage of these strategies, you need
to figure out how your clients’ businesses work
and how they are affected by the recession, and
then adjust your value proposition and offerings
accordingly. This takes a lot of extra work. Simply
offering more customer contact without a new
level of understanding layered in will not likely
advance your efforts.
“Finding new ways
to address a client’s
deeper needs is the
real issue, and those
needs often change
during a recession.”
When I work with clients on the issue of loyalty I
focus on the opposite, or, why customers leave.
While it is hard to measure what makes customers stay loyal, it is easy to measure why they leave.
Understand why they leave and you’ll better know
how to keep them. But it is not easy for salespeople to get straight answers from departing
customers, who typically take the path of least
resistance, throwing some version of the price
objection as they exit. This doesn’t change in a
recession. A survey done by MarketingSherpa in
July 2008 put the “why did they leave” question
to both salespeople and the vendors they sell to.
Salespeople cited price as the top reason, while
vendors cited service.
Use the MarketingSherpa study on sales calls
In a similar but more elaborate survey I conducted
for my book Selling 2.0, salespeople cited price
as the first reason for customers leaving, and
“too little attention paid” as the second. While buyers agreed on price as a top issue, they ranked
“too many problems,” “quality deteriorated,” and
“competition built a better relationship” far ahead
of “too little attention paid.”
Use the Selling 2.0 Survey on sales calls
When it comes to keeping customers loyal, neither
“paying more attention” nor “improving customer
service” is the critical issue. Finding new ways to
address a client’s deeper needs is the real issue,
and those needs often change during a recession.
Finding #4
As result of the recession, 27% of sales staffs
have created additional documentation explaining their competitive value proposition.
As a result of the recession my sales
organization has:
About three out of four salespeople do not carry
documentation explaining their value proposition
in light of the recession. This may seem natural to
some, and surprising to others. When salespeople
make calls today, should they talk about that huge
white elephant in the room, the recession causing
budget cuts, layoffs, and stress? Conventional
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FINDING #5
wisdom calls for salespeople to emphasize the
positive and diminish the negative. But, does this
mean ignoring the impact of the recession?
Here is a case where the best approach for selling
in a recession is actually counterintuitive to selling
in good times. Salespeople must ask about the
impact of the recession, negative or not. If they
do not understand the business environment
they are selling into, they will be operating at a
terrible disadvantage.
But once clients share how the recession has
impacted business, what then? It would be useful
to have some documentation on how your value
proposition can help in these difficult times.
Jill Konrath advises that “the best way to develop
this is by talking to customers who have bought
from you in the past 12 months. They can best
articulate the difference between your solution
and the previous status quo by sharing how
your product or solution shortened, increased,
eliminated, minimized, or benefitted them in
some measureable way.”
“While your company
may not be using the
recession as a strategic
window to pull ahead
of the pack, your
competition may.”
In addition, there are a lot of great free resources
that salespeople can use to sell with during a
recession. At the top of my list is a chart from the
National Bureau of Economic Research that maps,
in graphical form, how long each of the post
World War II recessions lasted. The average length
of time is 11 months. I tell my sales trainees to
put this on a client’s desk, tell them that even if
this recession lasts longer than 11 months, it will
end. Then ask what they want their business to
look like when the recession is over.
Use the National Bureau of Economic Research chart
on sales calls
My next favorite is a study that was released by
Interbrand in 2001 focusing on three iconic business rivalries that completely changed course as
a result of the 1990 recession; Wal-Mart pulled
ahead of Sears, Gillette pulled ahead of ColgatePalmolive, and Merrill Lynch bested Bear Stearns.
I tell my sales trainees to use this study as a cautionary tale. While your company may not be using
the recession as a strategic window to pull ahead
of the pack, your competition may.
Use the Interbrand study on sales calls
Finding #5
The biggest impact the recession is having on
sales is that it takes longer for a customer to
make buying decisions.
As a direct result of the recession more of my
customers are…
A 77% majority of sales organizations report that
the greatest impact the recession is having on them
is slower buyer decisions. Only about half, or 52%,
report their clients are buying less, and one in four
report clients are making shorter term commitments.
Demanding customer behavior is on the rise as
well. As a result of the recession, sales organizations report that 41% of their customers are
asking for more price concessions and 32% for
other concessions as well.
Delays in buying are not news to Jill Konrath.
She notes that a lot of customers get stuck in
a no-buying mode, reacting to all the bad news
about the recession. She advises salespeople to
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The CUSTOMER COLLECTIVE | Recession sales strategy
FINDING #5
“align yourself with recessionary times by asking
them to focus on what they can control as opposed to what they cannot: They can’t control the
economy, interest rates, or the availability of funds.
But they can control their work flow, they can increase their turnover, they can increase their sales.
Those are controllable. For companies that are just
stuck it’s imperative to get them moving. One way
is to simply address what they can change to improve their business. Once they get that idea, they
are more willing to hear what you have to say.”
“In a recession,
I recommend planning
every sales call with
the assumption that a
financial decision-maker
will be in the room. The
truth is, even if they
are not physically there,
their influence is.”
they are not physically there, their influence is.
Offer your client a financial rationalization for what
you propose. There are only two financial strategies: you either save them money, or make them
money. Prepare to “do the math” and show them
how investing in your product will benefit them.
Use the Dow Jones study on a sales call
Recessionary buying slowdowns are different in
three ways. If your organization can attack any
one of these, you can often get decision-making
back on track:
3. Fight the fear. It is well documented that
companies that invest during a recession can gain
tremendous advantage over competition. But recession buying is not always rational. Solid reasons for
buying your products can be swept away when
jobs are scarce, layoffs common, and fear becomes
more pronounced.
1. Slower cash flow. As your client’s cash flow
slows, individuals and departments that once
bought products with complete autonomy begin
to compete internally for financial resources. This
adds an extra layer of scrutiny and internal politics
that slows buying.
The keys to beating the recession fear factor were
uncovered by Dr. Gregory Berns, billed as the
world first neuroeconomist, from Emory University
in Atlanta GA. Berns wires subjects and watches
their brain activation as they respond to different
scenarios. Among his findings:
One way to fight this is to help your client find
the money internally. When I sold though the last
recession, I did this with a client by discussing
the internal competition she faced for funding our
purchase. I provided her with information and arguments that she used to compete for the money
to buy from me.
1. The brain’s “fear center” lights up when people
are uncertain.
When selling in a recession, a key question to ask
is, “How can I help my client find the money?”
2. More decision makers. A Dow Jones
study on organizational buying during the 2001
recession found that more people were involved
in buying decisions, especially people who were
financially oriented.
In a recession, I recommend planning every sales
call with the assumption that a financial decisionmaker will be in the room. The truth is, even if
2. The “fear center” is also activated when people
behave in contradiction to a group they feel part of.
Recessions create tremendous uncertainty, and
then the group fear mentality takes over. It’s often
not just the fear of uncertainty that freezes our client’s minds and budgets, it is the fear of swimming
against peers and others who are cutting back.
You can counter this by understanding your
client’s business to the point where you can show
how investment in your product or service maps a
path to success that is unique for them. “So what
if your peers are cutting back? This is your plan
for success.”
Use Dr. Berns’ findings on a sales call
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The CUSTOMER COLLECTIVE | Recession sales strategy
FINDING #6
Finding #6
Social media for prospecting is the top choice
among use of new media by sales staffs as
result of the recession
David Bonnette, Group Vice President, North
American Sales at Oracle, describes how building
a social network during the dotcom bubble burst
helped his company: “Right after the dotcom
crash we knew we faced tough times with several
business sectors: software, semiconductors and
high tech. At Oracle we saw this downturn as an
opportunity to become community brokers. We invested and built communities in these challenged
industries where we became both community
builder and thought leader. The communities took
the form of monthly meetings where the challenging times could be discussed. Our salespeople
took the lead in organizing them.
“Services like Facebook
and LinkedIn make it easy
for any salesperson to
create a personal virtual
network to reach out
to new prospects and
reinforce existing clients.”
“When those industries came out of the slump, we
had a very positive network effect. Those that helped
create the communities shared ideas and went
through a faster rate of change than companies in
other sectors. They adopted new technologies faster
and revitalized their businesses more quickly. When
the slump ended, their businesses were much stronger. Many benefited so much they started recommending Oracle to their peers and we found that our
margins were 20 to 30% higher with these groups
after the dotcom bubble slump ended.”
Today, many social networks are virtual, yet can
offer similar opportunities to the physical networks
Bonnette’s salespeople benefited from. Today,
services like Facebook and LinkedIn make it easy
for any salesperson to create a personal virtual
network to reach out to new prospects and reinforce existing clients.
The real key to success in is motivating clients
to “opt in” to your virtual social network. Once
they are “in,” you can effortlessly maintain regular
contact with them, track updates in their profile
without prodding, and extend your network by
reaching out to people in their networks. But
clients do not want “Always Be Closing”-type
salespeople in their personal lives any more than
they want them on their personal virtual networks.
Salespeople need to earn their client’s respect beyond their sales function by offering a relationship
of value. Building a Facebook or LinkedIn profile
that demonstrates this value and documents it
with testimonials is a first step.
According to Scott Allen, social media guru and
managing director at Link to Your World, the top
way LinkedIn is used in selling is to connect to
a “friend of a friend” at a target company and ask
about the priorities and high-level factors influencing the buying process. By connecting to an
insider, salespeople can get valuable information
on how best to approach the account.
Mark Zuckerberg, founder of Facebook, once
responded to a newspaper publisher who asked
how he could build his own online social community by saying, “You can’t.” Zuckerberg went on
to explain that communities already exist and the
question to ask instead is how they can help the
networks do what they want to do.
If you think of online social networking as just “doing
what networks want to do” and functioning in much
the same way as networking in the physical world
always has, you are well on your way to success.
ownload Jill Konrath’s FREE e-book “Can LinkedIn
D
Increase Your Sales?”
D
ownload a FREE digital version of Scott Allen’s 272
page book “The Virtual Handshake”
(registration required).
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The CUSTOMER COLLECTIVE | Recession sales strategy
Conclusion
In conclusion:
Planned or unplanned, every organization
has a recession sales strategy. Some will
coordinate with their marketing department,
reinvent their value proposition, and use
salespeople as the foot soldiers in an assault
to overtake competitors who are “stuck” in
recession paralysis. Others will have a strategy
built by default, selling the way they always
have while encouraging their sales staffs to
work and sell harder.
These survey results, as well as the advice
offered with it will, I hope, will encourage you to
stop thinking of the recession as merely a time
of slower sales and start thinking of it as a unique
and temporary window of opportunity. Instead of
viewing the recession as just a sales problem, see
it as a time of strategic opportunity, when investments of time and energy can result in significant
long-term gains.
Other blog posts by Josh Gordon on selling
through a recession:
F
ight recession discounts with the ultimate
strategy list
Fighting Recession Fear
Recession fighter promo letter
L
esson from selling in the 2001 recession; more
decision makers
How to hang on to clients in a recession
Can you sell in a recession? Take the test!
Three principles for selling in a recession...
Crafting your “save money” recession sell
Three principles for selling in a recession...
S
hould you downgrade your client profile during
a recession?
This survey uncovered surprisingly low levels
of strategic sales behavior. Organizations that
develop a recession selling strategy will be the
ones turning the recession into a sales opportunity.
Josh Gordon
President, Selling 2.0
www.selling2.com
About the author:
Josh Gordon is president of Selling 2.0, where he helps sales organizations sell faster with
research-based training and consulting services.
Gordon is the author of four books on the subject of selling, including Presentations That Change Minds
and Selling 2.0. He is an internationally recognized speaker who has appeared on CNN, CNBC, National Public Radio, The Fortune Business Report, Wall Street Journal TV, and WCBS Radio. His books
have been translated for publication in Germany, China, Korea, and Taiwan. Prior to starting Selling 2.0,
he successfully sold media in New York City for over 20 years. Josh blogs at www.SalesTrainingBlog.
com, and will be hosting The Customer Collective’s “Selling Through a Slump” forum.
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The CUSTOMER COLLECTIVE | Recession sales strategy